Meta Platforms Earnings Preview: More Layoffs on the Way?

In early trading Tuesday, the Dow Jones industrials were up 0.07%, the S&P 500 up 0.23% and the Nasdaq up 0.31%. The report on employment costs in the fourth quarter came in lower than expected. That is a good thing and helped moderate fears of a sharper-than-expected rate hike when the FOMC meeting concludes Wednesday afternoon.

After markets closed Monday, NXP Semiconductors said it fell short of the consensus earnings per share (EPS) estimate. The Dutch chipmaker beat the revenue estimate but guided current quarter sales below the consensus, although EPS guidance was in line with forecasts. Shares traded up 0.3% early in Tuesday’s regular session.

Before markets opened Tuesday morning, General Motors reported solid beats on both the top and bottom lines. The company issued upside fiscal 2023 guidance with a bonus of $5 billion to $7 billion in free cash flow from its automotive operations. Shares traded up by more than 7%.

Caterpillar missed the consensus EPS estimate but posted better-than-expected revenue. Cat booked more than $1.1 billion in noncash charges in the fourth quarter and took a hit from the strong dollar. Shares traded down more than 5%.

Exxon Mobil beat the EPS estimate and revenue jumped 12.3% year over year and beat the consensus estimate for the fourth quarter by 5.7%. Production was up by about 100,000 barrels of oil equivalent per day, but lower prices for crude and natural gas cut into earnings. The stock traded up by about 0.2%.

McDonald’s beat consensus top-line and bottom-line estimates on a sales jump of 5% globally (13% in constant currency). The company warned that short-term inflationary pressure is expected to continue into this year. Shares traded down 2.1% Tuesday morning.

Pfizer posted a mixed quarter, beating the earnings estimate but missing on revenue. What hurt shares Tuesday morning was a downside estimate on 2023 revenue related to COVID-19 treatments. The stock traded down about 0.3%.

UPS also missed the consensus revenue estimate but beat on earnings. As with Pfizer, downside revenue guidance for 2023 was partially offset by estimated dividend payments totaling $5.4 billion and buybacks totaling $3 billion for the year. Shares traded up more than 4%.

AMD and Snap are on deck to report earnings later on Tuesday, and Altria, Enterprise Products Partners, Peloton and T-Mobile will share their results first thing Wednesday morning.

Meta Platforms Inc. (NASDAQ: META) is expected to post its quarterly results after U.S. markets close Wednesday. Here is a preview of its report.

Shares of the social media and tech giant had a rotten year in 2022, dropping some 64% as a result of stiffer competition (TikTok) and tumbling ad sales, courtesy of Apple’s App Transparency Tracking. Meta also spent wildly on the metaverse and has not much to show for it, either now or possibly into the next year or so.

The company has also announced that it will fire 11,000. That may not be enough, according to Benchmark Capital analyst Mark Zgutowicz, who believes another 7,500 employees need to get the chop in order to accommodate Meta’s no-growth environment. We will find out what Zuckerberg plans to do after markets close Wednesday.

Of 57 analysts covering the stock, 38 have a Buy or Strong Buy rating and 16 have Hold ratings. At a recent share price of around $147.00, the upside potential based on a median price target of $155.00 is 5.4%. At the high target of $260.00, the upside potential is nearly 77%.

Meta is expected to report fourth-quarter revenue of $61.69 billion, which would be up 14.4% sequentially but down by 5.9% year over year. Adjusted EPS are pegged at $2.23, up 36.1% sequentially and down 39.2% year over year. For the full 2022 fiscal year, consensus estimates call for EPS of $9.05, down 34.3%, on sales of $116.29 billion, down 1.4%.

The company’s stock trades at about 16.3 times expected 2022 EPS, 18.3 times estimated 2023 earnings of $8.03 and 14.6 times estimated 2024 earnings of $10.04 per share. The stock’s 52-week trading range is $88.09 to $328.00. Meta does not pay a dividend, and total shareholder return for the past year was negative 51.3%.

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